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Four Seasons Looks for Next Hot Luxury Spot
Sep 07, 12 | 12:03 am
By Melissa Korn for The Wall Street Journal:
The original article, including video of the interview, is available on the Online Wall Street Journal website
Rebounding nicely from a drop-off in demand for luxury travel during the recession of the late 2000s, Four Seasons Hotels & Resorts now is looking for the next big thing. Or rather, says president and CEO Katie Taylor, the next big place.
Toronto-based Four Seasons operates 90 hotels world-wide (30 in the U.S.), including two that opened on Tuesday in China and Azerbaijan, and has more than 50 additional properties in development—most of those overseas as well. Among its planned destinations: Serengeti National Park in Tanzania and Indian technology hub Bangalore.
Founded in 1960 and now privately owned by Bill Gates's Cascade Investment and Saudi Prince Alwaleed bin Talal's Kingdom hotels, Four Seasons doesn't actually own any of its own properties, but rather designs and manages them for third parties that include individual investors and development companies.
That arrangement caused some problems in the recent recession, with Four Seasons reluctant to make concessions, while property owners, struggling to cover operating expenses amid falling revenue, were eager to cut costs. (Ms. Taylor said in the interview that cost-cutting was "not really" contentious. "I think there's no question that our owners and we are very aligned in how to manage the hotels through difficult times," she said.)
Ms. Taylor, 55 years old, became CEO in 2010 after more than 20 years with the company in roles that included corporate counsel, president and chief operating officer.
She spoke with The Wall Street Journal about international market opportunities, selling residential units to pay for hotels and managing relationships with property owners.
WSJ: The Four Seasons growth strategy is mainly international. What geographies are you interested in exploring further?
Ms. Taylor: China's a big focus. [A hotel in] Guangzhou opened a couple of weeks ago, and that is our fifth in China. We will open more than 10 hotels in China over the next few years.
[Another is] South America. We have a very small presence: one hotel in Argentina, one in Uruguay. [We're looking at] Brazil, Chile, Peru, as well as some select opportunities in Central America and continued growth in Mexico, where we have two hotels.
We continue to look at opportunities in Northern and Southern California.
Katie Taylor, chief executive of Four Seasons, says the company plans to open more than 10 hotels in China over the next few years.
WSJ: How is Four Seasons faring in Western Europe?
Ms. Taylor: We're doing fine. Sadly—or luckily at this point—[we] have quite a small portfolio of hotels in the euro zone. Those are all still performing well, although we're cautious about the balance of the year and next year. There's no easy solution on the horizon, so our job is to try to make those destinations as attractive as we can to travelers.
WSJ: Financing for luxury hotels tightened up in recent years, so property owners have turned to mixed-use spaces, with a residential component helping to pay for the hotel. Is that something you're comfortable with?
Ms. Taylor: Residential is hugely important. The issues are really about mix. In the pre-downturn era, there was a view that virtually every project could have endless amounts of residential. The size of the residential had to be complementary to the size of the hotel.
[At projects we've done recently], the number of condominiums is usually quite proportional to the number of hotel [rooms]. The proportionality is market-by-market. Take Orlando: Our hotel there will be 450 hotel rooms but the number of Four Seasons residential units will be quite a bit smaller [about 75]. If you look at [our new hotel in] Toronto, we have about 250 [rooms] in the hotel and 210 condominium units.
Ms. Taylor: The plans are to bring the island to its full potential. I'm not sure the work to figure out exactly what that means is completed, but there is a vision [Ellison's]. The timeline is entirely theirs.
The one issue [in Lanai] is trying to make sure that we have the right kind of airlift into the island. It's something we worked on with the previous owner and we'll continue to work on it as we go forward. There's a whole bunch of things that you could do: Charter, work with existing airlines [to increase service].
WSJ: Your investors include Bill Gates and Saudi Prince Alwaleed bin Talal, and you also have a number of rather famous property owners, such as Michael Dell. How do you juggle the interests of such high-profile people?
Ms. Taylor: It's not only the people that own the hotel, but there's also a lot who own the home[s]. Very personal, high-touch relationship management is something that we have always been known for and we make it a focus not only on the guest side but also on the investor and capital partner side. Knowing our owners personally, meeting with them often. Sometimes they'll visit us in Toronto, but most of the time we're traveling out to visit them.
WSJ: How do you use social media? Is it a tool for anything more than addressing customer complaints?
Ms. Taylor: Over half of our marketing spend [is] in digital. Every hotel has a social-media manager; some hotels more than one. Their role is not only to answer guest complaints, but also to engage with customers about things that interest them.
It can sometimes be a guest sleeping in the bedroom upstairs. They used to call the front desk. Now they tweet or blog about it. We just have to be where they are.
Write to Melissa Korn at firstname.lastname@example.org
Source: The original article, including video of the interview, is available on the Online Wall Street Journal website.
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